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Asia, Forex

Most Asian currencies drop as ECB’s dovish tone lifts dollar

* Thai baht weakens to 5-week low * Won, baht set to depreciate 0.7 for the week * Focus shifts to next week’s U.S. Fed meeting (Adds text, updates prices) By Aby Jose Koilparambil JULY 26 (Reuters) – Most Asian currencies eased on Friday against a stronger dollar after the European Central Bank (ECB) unexpectedly held interest rates steady and warned against pulling the policy easing trigger too quickly. ECB President Mario Draghi, however, all but pledged to loosen monetary settings amid growth outlook worries, and the central bank’s officials told Reuters after the policy meeting that an interest rate cut in September appeared certain. The dollar stayed near a two-week high versus the yen on Friday as investors pared expectations for aggressive Fed Reserve cuts ahead of key U.S. economic data later in the day. Against a basket of six major currencies, the dollar index touched a two-month high of 98.173. “Most Asian currencies are weighed down by strength in the dollar, which swung due to the secondary effects of the dovish ECB decision and the strong U.S. jobs data overnight,” said Saktiandi Supaat, head of foreign exchange research at Maybank (Singapore). U.S. weekly jobless claims fell to a three-month low last week, pointing to sustained labour market strength even as the economy appears to be losing momentum. Ongoing Sino-U.S. trade concerns are also weighing on Asian currencies, added Supaat. Uncertainties over whether Washington and Beijing will be able to settle gaping differences over trade and technology at a meeting in Shanghai next week are keeping investors on guard. Global financial markets will now shift focus to the Federal Reserve meeting next week where hopes are pinned on a 25 basis points rate cut. The Thai baht and the South Korean won weakened as much as 0.4%, and both currencies are set to depreciate more than 0.7% for the week. The baht touched its weakest since June 20 on the day while the won fell to a more than one-month low. The Indonesian rupiah dropped as much as 0.3%, while the Malaysian ringgit slipped up to 0.2%. The rupiah and the ringgit are slated to fall about 0.5% and 0.2%, respectively, for the week. The Chinese yuan weakened up to 0.1%, and so did the Indian rupee. The Singapore dollar was down about 1%, not reacting much to June industrial production data, which showed output slipped for the month, dented by the electronics sector, although the drop was slightly less than expected. CURRENCIES VS U.S. DOLLAR Change on the day at 0527 GMT Currency Latest bid Previous day Pct Move Japan yen 108.620 108.62 +0.00 Sing dlr 1.368 1.3671 -0.08 Taiwan dlr 31.083 31.085 +0.01 Korean won 1183.800 1181.5 -0.19 Baht 30.970 30.88 -0.29 Peso 51.160 51.17 +0.02 Rupiah 14005.000 13975 -0.21 Rupee 69.025 69.04 +0.02 Ringgit 4.119 4.113 -0.13 Yuan 6.882 6.8734 -0.12 Change so far in 2019 Currency Latest bid End 2018 Pct Move Japan yen 108.620 109.56 +0.87 Sing dlr 1.368 1.3627 -0.40 Taiwan dlr 31.083 30.733 -1.13 Korean won 1183.800 1115.70 -5.75 Baht 30.970 32.55 +5.10 Peso 51.160 52.47 +2.56 Rupiah 14005.000 14375 +2.64 Rupee 69.025 69.77 +1.08 Ringgit 4.119 4.1300 +0.28 Yuan 6.882 6.8730 -0.13 (Reporting by Aby Jose Koilparambil in Bengaluru Editing by Jacqueline Wong)

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